Home/AUD/Central banks/FX/News events/Newsfeed/Technical analysis/USD

Aussie falls on Fed’s Harker’s comments

Share Print 0

AUD/USD has dropped lower today and is trading at 0.6252, down 0.43%.

Fed expected to remain aggressive

The Federal Reserve has signalled that it plans to remain hawkish, as the relentless battle with spiralling inflation continues. This aggressive stance was reaffirmed by Philadelphia Federal Reserve President Patrick Harker on Thursday. Harker stated that higher interest rates had failed to curb inflation, and the Fed would have to continue raising rates “for a while”. He added that rates would be “well above” 4% by the end of the year. Currently, the benchmark is at 3.25%, with the Fed holding its next meeting on November 2nd.

The markets have received the Fed’s message loud and clear, and have priced in a 0.75% hike at the November 2nd meeting and in December. The Fed has already raised rates by 0.75% at three straight meetings, and the steep rate-tightening cycle is set to continue, which is good news for the strong US dollar.

Australia released September’s employment report on Thursday, which indicated that the labour market remains robust. The economy added 13,300 full-time jobs, with a decline of 12,400 part-time jobs. This follows a superb gain of 55,000 jobs in August. The strong labour market has allowed the Reserve Bank of Australia to hike rates in order to combat inflation, but the central bank has eased up on tightening.

The RBA surprised the markets with a small rate hike of 0.25% at its October meeting, which was smaller than expected.  At the meeting, the RBA noted that inflation remains too high, but the modest rate hike fits in with that the central bank’s projection that inflation will peak in early 2023. The RBA meets on November 1st, a few days after the September inflation report, which will likely be a major factor in the RBA’s rate decision. The markets have priced in 0.25% increases at the November and December meetings.

.

AUD/USD Technical

  • AUD/USD continues to test support at 0.6250. The next support level is 0.6121
  • There is resistance at 0.6331 and 0.6460

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental and macroeconomic analysis, Kenny Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in major online financial publications including Investing.com, Seeking Alpha and FXStreet. Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

Latest posts by Kenny Fisher (see all)

, , , ,
Back to Top